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Chapter 11

Trust, Conflict, and Negotiation

Case Study: Distrust in the National Football League (NFL)

Case Questions:

What role did trust play in the NFL Lockout of 2011?

Why was organizing a league in 1920 a better option than allowing independent clubs to take up much of the professional football market?

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Trust in Organizations

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LO 11.1 Outline the bases of trust and predictable outcomes of trust in organizations

Generally, we can form three types of trust: disposition-based trust, cognition-based trust, and affect-based trust (see Figure 11.1).

Disposition-based trust exists when people possess personality traits that encourage them to put their faith in others. For instance, you might be the kind of person who will trust the new team leader unless you are given a reason not to.

In contrast, in cognition-based trust, people rely on factual information such as someone’s past experience and track record as a basis for trust. You might be wary of a new team leader until you recognize that he or she demonstrates the character, integrity, abilities, and benevolence to lead the team.

Finally, affect-based trust occurs when people put their faith in others based on feelings and emotions. For example, you are more likely to trust a new team leader if you feel you have made an emotional connection with him or her, such as by finding out you grew up in the same town.

Choi, B. K., Moon, H. K., & Nae, E. Y. (2014). Cognition- and affect-based trust and feedback-seeking behavior: The roles of value, cost, and goal orientations. Journal of Psychology, 148, 603-620; Mayer, R. C., Davis, J. H., & Schoorman, F. D. (1995). An integrative model of organizational trust. Academy of Management Review, 20, 709–734; McAllister, D. J. (1995). Affect- and cognition-based trust as foundations for interpersonal cooperation in organizations. Academy of Management Journal, 38, 24–59.

Trust in Organizations

Outcomes of trust:

When trust is high in the workplace, people work better together and are more focused.

Psychological contract: determines the degree to which employees trust their organizations.

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Just as trust is important in how we interact with others in our personal lives, we also have expectations about how we are treated within an organization. This type of unwritten expectation between employees and organizations is called a psychological contract.

Trust in Organizations

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Employees working in a low-trust organizational environment are more likely to be distracted from their duties, lack engagement in their tasks, exhibit defensive behaviors, display apathy toward organizational goals, and have higher levels of absenteeism (see Figure 11.2).

Trust in Organizations

Social networks: Recurrent interactions with others

Someone who is trustworthy shows:

Competence

Character

Goodwill

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Trust also plays an important part in how we relate to others in work through our social networks. In this context, social networks describes the recurrent patterns of interaction with others that take place when carrying out work activities (e.g., exchanging information or working on projects). People who demonstrate their competence (the skills and abilities to successfully support the completion of a task), character (the ability to keep confidence, respect others, and stand up for what’s right), and goodwill (the ability to listen, offer positive remarks, and provide gentle encouragement) in their interactions with others tend to be perceived as being trustworthy. Delgado-Márquez, B. L., Belitski, M., & Delgado-Márquez, L. (2013). The role of individuals' social networks density on their transfers of trust behaviors and expectations: A social capital approach. In Psychology of trust: New research (ppp. 305–324). Hauppauge, NY: Nova Science Publishers.

Conflict in Teams and Organizations

Conflict is a clash between individuals or groups due to different opinions, thought processes, and perceptions.

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Teams and organizations face many challenges and it is inevitable that conflicts will naturally arise. We define conflict as a clash between individuals or groups due to different opinions, thought processes, and perceptions. As a member of an organization, you will probably have opinions that differ at times from those of other teams or individuals. Sometimes such disagreements and clashes can make us feel uncomfortable. But does this mean all conflict is bad? Not necessarily. There are times when conflict actually helps teams and organizations be more creative and innovative.

Conflict in Teams and Organizations

Functional conflict consists of productive and healthy disputes between individuals or groups.

Dysfunctional conflict consists of disputes and disagreements that negatively affect individuals and/or teams.

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When conflict is constructive, it can help improve work performance, redefine company goals, and encourage people to communicate better. Such functional conflict consists of productive and healthy disputes between individuals or groups. For functional conflict to be successful, individuals from opposing sides need to be genuinely interested in finding a resolution to the problem and willing to listen to each other. Providing individuals with a forum to express their opinions often gives rise to critical thinking and helps to generate new ideas and solutions.

In contrast, dysfunctional conflict consists of disputes and disagreements that negatively affect individuals and/or teams. This type of conflict often arises from an unwillingness to listen to each other or a reluctance to agree on a resolution or goal. High levels of dysfunctional conflict can lead to absenteeism, turnover, and a substantial drop in work performance, all of which can have a devastating effect on organizational goals and objectives.

Conflict in Teams and Organizations

Three main types of conflict:

Task conflict

Relationship conflict

Process conflict

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The three main types of conflict in organizations are task conflict, relationship conflict, and process conflict.

Task conflict refers to a clash between individuals about the direction, content, or goals of a work assignment. Relationship conflict is the clash in personality between one or more individuals in the workplace. This type of conflict can be useful in resolving disputes if the parties are willing to communicate in a constructive and effective way.

Process conflict refers to the clash in viewpoints about how to carry out work. Like task conflict, process conflict can be beneficial to organizations as long as it operates at a low level.

Conflict in Teams and Organizations

The four stages of the conflict process:

antecedents of conflict

perceived/felt conflict

manifest conflict

outcomes of conflict

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As we have learned, conflicts can have positive or negative outcomes depending on how the situation is managed. The following example illustrates the four different stages of the conflict process: antecedents of conflict, perceived/felt conflict, manifest conflict, and outcomes of conflict.

Conflict in Teams and Organizations

The conflict process:

Antecedents of conflict are factors that set the scene for potential disputes.

In the perceived/felt conflict stage, emotional differences are sensed and felt.

In the manifest conflict stage, people engage in behaviors that provoke a response.

The outcomes of conflict stage, describes the consequences of the dispute.

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The antecedents of conflict refer to the factors that set the scene for potential disputes. These antecedents include lack of communication, incompatible personalities, and collisions in value systems. When you have finally settled into your workday, one of your coworkers says, “Glad you could join us,” which prompts a chuckle from the rest of the team. You perceive that the team has a problem with your tardiness and you feel the tension directed toward you. In the perceived/felt conflict stage, emotional differences are sensed and felt.

Now you have a choice. Do you address the conflict head-on or do you ignore it? In the manifest conflict stage, people engage in behaviors that provoke a response. You can either try to resolve the conflict by bringing the matter out into the open, or you can suppress it, which may temporarily solve the problem but may also leave the situation open to future conflict. The final stage is the outcomes of conflict stage, which describes the consequences of the dispute. Depending on how you handle the conflict, there will be either functional or dysfunctional outcomes.

Conflict Management Strategies

Five conflict management strategies include:

Avoidance

Accommodation

Competition

Compromise

Collaboration

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LO 11.3 Identify the five basic conflict management strategies

The five strategies (see Figure 11.3) are avoidance, accommodation, competition, compromise, and collaboration.

Chang, W.-L., & Lee, C. Y. (2013) Virtual team e-leadership: The effects of leadership style and conflict management mode on the online learning performance of students in a business-planning course. British Journal Of Educational Technology, 44, 986-999; Kilmann, R. H., & Thomas, K. W. (1975). Interpersonal conflict-handling behavior as reflections of Jungian personality dimensions. Psychological Reports, 37, 971–980.

Conflict Management Strategies

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Conflict is inevitable in the workplace. If you understand the five basic conflict-management strategies, you will be able to manage conflicts so they are productive and do not escalate out of control. The five strategies are avoidance, accommodation, competition, compromise, and collaboration.

Negotiation and Dispute Resolution

Negotiation is the process of reaching an agreement that both parties find acceptable.

When getting ready to negotiate:

Outline your goals and objectives

Research your opponent

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LO 11.4 Describe the negotiation process

We may not realize it, but most of us negotiate on a daily basis in every aspect of our lives with family members, friends, classmates, roommates and partners, as well as at work with our coworkers, team leaders, and bosses. We define negotiation as the process of reaching an agreement that both parties find acceptable. Since disagreements are common in a range of issues including task allocation, work schedules, and salaries, the art of negotiation is a necessity in life as well as in the workplace.

Before any negotiation, it is critical for each party to outline the goals and objectives they would like to achieve. It is also essential for each party to do its homework on its opponent--to consider the other party’s position and decision-making power, the length of time it has been in business, and whether it has any other negotiating history.

Negotiation and Dispute Resolution

Shaping Expectations

Establishing ground rules will set the stages for the parties to begin negotiations.

Providing Supporting Evidence

During this stage of the process, both parties take turns to explain their issues backed up with supporting evidence.

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Both parties agree on negotiation that should set the ground rules for the process. This might refer to things such as talking one at a time, listening to each other, and treating one another with respect. It is also a good idea to set rules regarding the use of derogatory language or any other kind of verbal attacks that will not be tolerated.

With the ground rules set, it is now time for the parties to exchange their demands.

In this stage of the process, both parties take turns explaining their issues, which they each back up with supporting evidence.

Negotiation and Dispute Resolution

Negotiating the deal:

Discussions

Decisions

Agreements

Agreement and implementation:

Clarifying

Formalized in writing and signed

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This is the bulk of the process where extensive discussion takes place. At some point, decisions will be made and agreements will occur. Following some further discussions around operations, legal matters, and logistics, both parties finally reach an agreement.

With the bargaining process complete, the parties move on to the final stage of negotiation--formalizing an agreement and implementing the deal. They spend time clarifying the deal and ensuring that everyone understands the outcome of the negotiations and the specifications of the final agreement. Pending due diligence, the agreement will be formalized in writing and signed by each party by an agreed date.

Negotiation and Dispute Resolution

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Negotiation and Dispute Resolution

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A mediator is a neutral third party who attempts to assist parties in a negotiation to find a resolution or come to an agreement using rational arguments and persuasion. The chief role of mediators is to get the opposing parties to communicate again, rather than providing a solution or a decision. A mediator has no right to impose his or her views on the parties. An arbitrator is a neutral third party officially assigned to settle a dispute who listens to both sides of the argument as stated by the parties. Unlike a mediator, an arbitrator has the power to issue a judgment, which is final and binding for all parties. Finally, a conciliator is a neutral third party who is informally assigned to persuade opponents to communicate. The conciliator is allowed to offer an opinion, but unlike that of an arbitrator, this judgment does not carry any legal weight.

Bargaining Approaches

Distributive bargaining occurs when two parties both try to claim a “fixed pie” of resources.

Integrative bargaining occurs when both parties negotiate a win–win solution.

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LO 11.5 Compare distributive and integrative bargaining approaches

Distributive bargaining occurs when two parties both try to claim a “fixed pie” of resources. For example, say you are trying to buy a used car. You know you will need a certain amount of money to fix the car up the way you want it, and for that reason, you want a reduction in the price. However, the car salesperson wants the maximum price he can get for the car and tells you to take it or leave it. This is known as a win/lose situation, in which one party only gains and the other one only loses.

Bargaining Approaches

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It is always wise to have a best possible alternative to a negotiable agreement (BATNA), which is the best outcome you could achieve if the negotiation fails and you must follow another course of action.25 For example, say you want a salary raise of US$5,000 per year, but you will accept US$3,000 if it is offered. What will you do if you are unable to get the US$3,000 raise? Will you settle for your current salary? Will you quit your job and try to find a higher paying job in another organization? Once you have identified your BATNA, you will be in a better position to figure out your zone of possible agreement (ZOPA) which is the area where two sides in a negotiation may find common ground26 For example, say you request your US$5,000 salary raise and your boss tells you that the best offer will be US$3,500. Since this figure lies within the zone that both parties find acceptable, then it is likely an agreement will be reached.

Explanation of Benefits (EOB)

As patient advocate, you frequently receive questions regarding bills. A patient called today and asked you to explain a form that she received from her insurance company. She said the form was called an Explanation of Benefits. She said that Table A-1 provided the following information:

Table A-1 Explanation of Benefits Information

Provider:	Dr. Theodore Simmons
Date:	11/11/11
Type of Service:	Office Visit
Amount Submitted:	$82.00
Amount Allowed:	$74.00
Coinsurance:	$14.80
Deductible:	$300.00
Copay:	$20.00

Using your textbook and the Internet, submit your answers to the following questions on a Word document in the appropriate drop box.

Questions:

1. How would you explain what an Explanation of Benefits form is?

2. How would you explain the difference between the amount submitted and the amount allowed?

3. After you explain the amount allowed to her, she gets irate and exclaims, “How dare Dr. Simmons overcharge me by $8.00!” She then said that she was going to call his office and give them a piece of her mind.

4. How will you respond to this?

Chapter 8

Decision Making, Creativity, and Innovation

Case Study: Creativity and Innovation, Arizona State University

Case Questions:

What innovative decision boosted Arizona State University’s enrollment?

How does ASU think about enrollment differently than competitors, and why do they do thing this why?

How could the practices mentioned in this chapter and case report be integrated into your workplace?

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Decision-Making and Problem-Solving

Decision-making and problem-solving are not the same thing

Decision-making: Takes place during problem solving and involves judgment

Problem-solving: Method using analytical thinking to find a solution

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LO 8.1 Identify the primary types of decisions managers make to solve problems

Decision making is the action or process of identifying a strategy to resolve problems.

Problem solving is a method that requires analytical thinking and intuition to find a solution; whereas decision-making is a process that takes place during problem-solving and involves judgement to decide on the right course of action.

Decision-Making and Problem-Solving

Two types of decisions:

Programmed: Routine

Non-programmed: Nonroutine

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Programmed decisions are automatic responses to routine and recurring situations. Usually, these situations have occurred in the past and are familiar to the people dealing with them.

Non-programmed decisions respond to new or nonroutine problems for which there are no proven solutions. In these situations, employees will not find the answer they are looking for in the company handbook or policy guidelines.

Decision-Making and Problem-Solving

Five-step model of decision-making often used by managers

Define the problem

Identify and weight decision criteria

Generate multiple alternatives

Rate alternatives on the basis of decision criteria

Choose, implement, and evaluate the best alternative

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The first step in the decision-making process is to define the problem. You need to fully understand the nature of the problem and be able to describe it in clear, concise terms in order to arrive at a solution.

Now that the problem has been defined, you will need to identify and weigh the criteria in the decision. For example, the hazards and risks involved in the injuries, the degree to which employees follow safety procedures, and why injuries are becoming more common.

Next, you may think of alternate solutions to the defined problem. Perhaps if you discover that employees are not adhering to safety guidelines, then stricter sanctions and punishments should be imposed for violations of safety standards.

During the rating alternatives step, you might spend some time weighing the two possible solutions against each other and find they both rate poorly on the basis of the criteria. For example, sanctions and punishments could be viewed negatively and as a threat, and employees might fail to report injuries for fear of punishment.

Once the first four steps have been completed, it time to make a decision on the basis of the information you have gathered. In this example, you might use a critical thinking strategy to resolve the problem.

Decision-Making and Problem-Solving

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Decision-Making in the Real World

Other factors in decision-making:

Bounded rationality

Complete rationality

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LO 8.2 Identify factors that influence the way we make decisions in the real world

Bounded rationality is the idea that we are restricted by a variety of constraints when making decisions. This concept is in contrast with complete rationality, which assumes we take in to account every single criterion or possible alternative to make a decision. In reality, most of us don’t have the time or mental processing capacity to deal with so much information; instead, we tend to narrow the options to a few key criteria.

Decision-Making in the Real World

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Decision-Making in the Real World

Other factors in decision-making:

Satisficing decisions

Intuition

Heuristics

Availability heuristics (availability bias)

Anchoring and adjustment heuristics (anchoring bias)

Representativeness heuristics

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Satisficing decisions aim for acceptable results rather than for the best or optimal solutions. Satisficing is useful for less important decisions. For example, when purchasing a pack of chewing gum, we tend to choose something that looks good. We don’t spend time researching the merits of all the different chewing gum brands and flavors on the market. However, satisficing is not appropriate for important decisions.

Intuition is the unconscious process of making decisions based on imagination and possibilities.

Another aspect of decision making is heuristics, shortcuts or “rules of thumb” that allow us to make judgments and decisions quickly and efficiently. There are three types of heuristics:

Availability heuristics allow us to make judgments based on examples and events that are available and immediately spring to mind. Sometimes, we can make incorrect judgments about certain issues because of our reliance on information that is more readily available to us. This is called availability bias.

Anchoring and adjustment heuristics lead us to base decisions on the first piece of information and then adjust it, leading to anchoring bias, which is the tendency to over-rely on initial information while overlooking other important criteria.

With representativeness heuristic, we base a decision on our existing mental prototype and similar representative stereotypes.

Decision-Making in the Real World

Decision making is influenced by different biases:

Common-information bias

Confirmation bias

Ease-of-recall bias

Hindsight bias

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Common-information bias is the inclination to overemphasize information held by the majority of group members while failing to consider other perspectives held by the minority.

Confirmation bias is the tendency to seek out information that fuels or confirms our preexisting views and to discount information that conflicts with them.

Ease-of-recall bias is the propensity to over-rely on information recollected from memory when making a decision.

Hindsight bias is the tendency to overestimate our ability to predict an outcome of an event.

Decision-Making in the Real World

Decision-making is influenced by different biases:

Projection bias

Escalation of commitment

Sunk coast bias

Framing error

Lack of participation error

Randomness error

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Projection bias is the inclination to believe that other people think, feel, and act the same way we do (we project our thoughts and attitudes onto them).

Escalation of commitment is the increased commitment we may make to a decision despite receiving negative information about the consequences.

Sunk cost bias is the decision to continue an unwise investment based on past investments of time, effort, and/or money.

Framing error is the tendency to highlight certain aspects of a situation, either positive or negative, to solve a problem while ignoring other aspects.

Lack of participation error is the inclination to exclude certain people from the decision-making process.

Randomness error is the tendency for people to believe they can predict the outcome of chance events based on false information or superstition.

Decision-Making in the Real World

Creativity and Innovation in Individuals, Teams, and Organizations

Creativity and innovation can aid decision-making

Large organizations like Apple and Facebook have business models based on promoting creativity and innovation

Emphasize creativity and innovation to stay competitive

LO 8.3 Discuss the critical nature of creativity and innovation in today’s organizations

Creativity and innovation can aid decision making by giving people a greater understanding of the company needs and its customers.

Creativity is the generation of meaningful ideas by individuals or teams, and innovation is the creation and development of a new product or service.

Creativity and innovation affect organizational behavior in those organizations in which employees are expected to generate creative products, processes, and strategies. The contribution from a group of individuals with varying knowledge, skills, backgrounds, and experiences can be a powerful force in creating innovative ideas, making decisions, and generating solutions. It is not just technology companies that have embraced this business model. Most successful organizations, whether in media, fashion, architecture, medicine, or engineering, are emphasizing creativity and innovation in order to stay competitive.

A Three-Component Model of Creativity

Creativity is a process involving:

Domain-relevant skills and expertise

Creativity-related processes

Productive forgetting

Use of heuristics

Task motivation

LO 8.4 Describe the three-component model of creativity

Creativity researcher Teresa Amabile believes that creativity is a process rather than a list of traits, and she proposes a three-component model of creativity to describe the factors necessary for an individual to be creative.

The three components of Amabile’s model are domain-relevant skills and expertise, creativity-relevant processes, and task motivation.

Amabile argues that we must have what she calls domain-relevant skills and expertise; that is, knowledge about the subject and the skills and talent to provide the most creative and productive responses. An increase in knowledge leads to higher levels of creativity.

According to Amabile, creativity-relevant processes, work methods dependent on particular personality characteristics, methods of thinking, and knowledge of heuristics, are a second component needed for creativity. Personality traits such as self-discipline, perseverance, delayed gratification, and independence, for instance, appear to be associated with creative minds. They also have the ability to use productive forgetting, which allows them to abandon a solution that isn’t working in favor of a new one.

People who have an innate interest in a chosen task tend to be more motivated to produce creative ideas. It stands to reason that if we find a task interesting and stimulating, then we will be more inclined to engage with it. More recent research suggests that extrinsic motivation, when used in the right way, could support intrinsic or inner motivation, especially when the levels of intrinsic motivation are already high.

A Three-Component Model of Creativity

Creative Potential Versus Practiced Creativity

People with creative potential possess skills

People with practiced creativity spot opportunities to apply skills in the workplace.

Creativity can lead to:

Innovative thinking

Better performance

Increased job satisfaction

Positive impact on the bottom

LO 8.5 Identify the three types of support for creativity

People with creative potential tend to possess the skills and capacity to generate ideas. In contrast, practiced creativity is the ability to spot opportunities to apply these skills in the workplace.

If companies get it right, a creative mindset can lead to innovative thinking, better performance, increased job satisfaction, and a positive impact on the bottom.

Creative Potential Versus Practiced Creativity

Three types of support for creativity:

Organizational

Supervisory

Work group

Creativity flourishes when employees are provided with the autonomy and resources, they need to implement their concepts and when they are given license to take risks. Organizations that provide appropriate rewards and feedback and that encourage a collaborative environment tend to possess a more creative culture.

Employees who perceive their supervisor as supportive will feel more comfortable about speaking up and making suggestions.

Group members can support creativity by establishing certain norms, such as welcoming different perspectives, actively listening, fostering collaboration, being open-minded, and clearly communicating their views and approaches.

The Innovation Process and Types of Innovation

Steps in the innovation process:

Idea generation

Problem-solving

Implementation and diffusion

LO 8.6 Outline the steps in the innovation process

The first step in the innovation process is the creation of the idea itself. Usually, an idea is born out of the recognition of a need for a solution and generated from existing information, experience, and knowledge.

The second step of the innovation process is to identify any advantages and disadvantages associated with the innovation, explore costs and value, and set goals and priorities.

The final stage of the innovation process is producing and distributing the new product or idea. Without implementation, there is little chance of an idea becoming a reality.

The Innovation Process and Types of Innovation

Different types of innovation include:

Product innovation (e.g., Amazon Kindle)

Process innovation

Organizational structure innovation

People innovation

Product innovation is the development of new or improved goods or services that are sold to meet customer needs. The Amazon Kindle would be an example of a new product innovation.

Process innovation is the introduction of new or improved operational and work methods. Footwear manufacturing company, Nike is focusing on 3D printing as a way of revolutionizing its manufacturing process for mass scale production.

Organizational structure innovation is the introduction or modification of work assignments, authority relationships, and communication and reward systems.

People innovation includes the changes in beliefs and behaviors of individuals working in an organization.

The Innovation Process and Types of Innovation

Different types of innovation continued:

Exploitative innovation

Exploratory innovation

Exploitative innovation focuses on the enhancement and reuse (exploitation) of existing products and processes.

Exploratory innovation focuses on risk taking, radical thinking, and experimentation.

Case Study 11.1: Conflict and Negotiation at Disney

The great dreamer Walt Disney himself couldn’t have dreamt of the corporate fairy tale that his company has become in the past forty years. The Walt Disney Company or just “Disney” is a company worthy of multiple books to discuss the amount of continued excellence that it has taken to get them to where they are today. The factor of Disney that is most worthy of study in this modern era of media is its ability to consolidate and merge with other companies to become the largest media company in the world. Today, as mass media consolidates further and further into three to five major conglomerates, Disney’s strong culture and affinity for acquisitions has put them at the top of their industry.

Disney’s competitors could not have seen the wave of movie power that Disney would be able to churn out due to a handful of what were at the time pricey purchase. When Disney purchased Marvel for $4 million and Lucasfilm for $4 billion, their competition could never have known that the fruits of these acquisitions would be so sweet. With movies from each of these purchases making well over $100 million within the first few weeks of release, Disney could not have imagined such great returns.

Year after year Disney movies dominate the box office and networks owned by Disney dominate the small screens. With huge growth in their theme park business and both Marvel and Lucasfilm in their stable, Disney looks to remain a powerhouse for the long haul. The thing that has gotten them here is their ability to use their unique future-oriented culture to absorb outside cultures as they acquire their competition. While they have gotten bigger and bigger so too has their competition with NBC Universal and Warner Media both owned by Comcast and AT&T respectively. And even with the rise of Netflix and other streaming platforms, Disney has consistently bought companies that could soon give them an edge in the streaming space where they plan to release a platform hosting all of their content companywide. Their ability to think ahead and buy into the future is going to remain a vital component to their success as we see further consolidation in the mass-media sector.

One of the most substantial acquisitions of the Disney story was Pixar in 2006, a move by both companies that has been seen as the gold standard in acquisition synergy. At the time Pixar was a big player in the animation realm with mega-hits like Toy Story and Finding Nemo. However, their vision for the entertainment industry always coincided with their intent to remain a fiscally solvent business due to their high operating costs, long turnover time, and limited release schedule. This meant that while they were making fantastic movies, they were having trouble balancing art with business and innovation. For this reason, Disney as a company with many streams of income and a very similar industry vision was the perfect fit to acquire Pixar.

While Pixar was one of Disney’s easiest acquisitions, they have been able to make dozens more like this that keep them competing in every corner of media. With organizations like 21st Century Fox, Marvel, Fox Family Worldwide, and ABC all under the arm of the Walt Disney Company, they have consistently managed to facilitate a culture that consistently cohabitates and assimilates other organizations into their own. Even now, as smaller companies are being bought up by the largest players, Disney is willing to pay top dollar for a company with solid structure that is compatible to its goals and values.

Disney, one of the most recognizable brands in the world, has managed to maintain the same association with the brand that they have had since the visionary founder was still in charge. They have maintained the magical side of their brand while incorporating dozens of other companies into their everyday operations. There have been very few hiccups along the way, with a workforce more loyal to their brand name than any in the industry. This culture also permeates into the way that they handle their business regarding acquisitions. They have never made themselves the cutthroat negotiators often seen in the business from top studio heads but instead tend to pay more than what an asset is worth as long as it is an asset trending upward.

When they purchased the rights to make Marvel movies, they were entering a space that had never been successful, meaning that many said that they overpaid at $4 million. The same is also true for the rights to Star Wars, both thought to be extravagant purchases despite being so far apart. Disney knew what they were getting into and had no fear paying more than what they could have gotten each entity for and the results speak for themselves. Disney’s ability to absorb companies into their own culture has allowed them to build themselves from a small-scale cartoon movie studio into the purveyor of high-quality media content that they are today. Due to their “all in” negotiation strategy of investing in the best content, they have made themselves the first choice of any studio looking for partners.

Discussion Questions

1. Discuss how Disney’s negotiation tactics differ from most in their industry.

2. Discuss briefly the characteristic that has led Disney to its current size.

Resources

Hagey, K., & Schwartzel, E. (2018). 21st century fox agrees to higher offer from Disney. The Wall Street Journal. Retrieved from https://www.wsj.com/articles/fox-disney-announce-new-deal-1529496937

PBS. org. (n.d.). Walt Disney Co. FRONTLINE. Retrieved from https://www.pbs.org/wgbh/pages/frontline/shows/cool/giants/disney.html

Ruesink, M. (2015). Top corporate mergers: The good, the bad & the ugly. Rasmussen College. Retrieved from https://www.rasmussen.edu/degrees/business/blog/best-and-worst-corporate-mergers/

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